Saturday, December 27, 2014

RUSSIA SLAGGED BY OIL PRICE RESET

Putin's Russia is a roller coaster ride for citizens, politicians and business people. The incomplete transition to capitalism has left a vacuum that has been filled by state control.

Putin has strategically reversed former President Boris N. Yeltsi's appeal to the former Russian republics to swallow” as much autonomy as they could. Today Russia defends it's perceived geopolitical interest with military incursions and outright annexations.

An article in the New York Time's , Even Loyalty No Guarantee Against Putin, provides a snapshot of . Mr. Putin himself had described private ownership of
strategic industries with the Russian word to roost. “A chicken can
exercise ownership of eggs, and it can get fed while it’s sitting on the
egg,” he said, “but it’s not really their egg.”

The dream of returning to superpower status has been battered by low oil
prices and Western sanctions. The ruble is now worth less than half of
its value.

Now the eggs are no producing for the state or the companies that exercise ownership - Russia's economy is in recession. For the first time in six years Russians will bear the brunt of Putin's aggressive, isolationist and expansionist policies.

Many Russian companies have been locked out of Western capital markets
following the sanctions imposed on the country for its involvement in
Ukraine. Russian Finance Minister Anton Siluanov says his economy could contract by 4% in 2015 and the budget deficit could be 3% of GDP.

Unlike Newfoundland and Labrador, which shares Russia's dependency on non-renewable resources to balance the books, they have a rainy day fund. The Russians have a reserve funds containing the equivalent of $88.9 billion as of Dec. 1, while the
National Wellbeing Fund, created to cover long-term outlays for social
spending, was equal to $80 billion.

Finance
minister Anton Siluanov on Friday said that the Russian economy could
contract by 4 percent next year and that the budget could have a
deficit of more than 3 percent of gross domestic product